NaviSite Close to Selling Colo Centers

Managed hosting provider NaviSite (NAVI) says it is negotiating the sale of facilities and customers from its colocation business as it focuses on the enterprise hosting market.

Rich Miller

January 5, 2010

2 Min Read
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NaviSite closed out 2009 as one of the year's best-performing data center stocks, with an annual gain of 400 percent as it recovered from 40 cents to $2 a share. That rebound was due in part to a shift in the company's business to focus on enterprise managed hosting clients. As part of that process, NaviSite (NAVI) announced plans to divest its colocation operation and some of the data centers supporting that part of its business.

NaviSite President and CEO Arthur Becker provided an update for investors during a Dec. 10 conference call. "This process is progressing and we are currently negotiating the documentation for the sale of certain of these data center assets and the customers within those data centers," Becker said. "We anticipate that we will close one or more of these transactions before the end of this fiscal second quarter."

Last June NaviSite hired the Bank Street Group to seek buyers for its colocation business as part of a strategic plan to address its NASDAQ compliance challenges. An improvement in the company’s stock price helped NaviSite meet the exchange’s minimum market capitalization, but the company said it would focus on building its higher-margin enterprise application hosting and cloud platform and use revenues from the asset sale to de-leverage its finances.

As part of its effort to divest its colo business, NaviSite opted not to renew the lease on its Los Angeles data center at the Garland Building (1200 W. Seventh), which housed colocation clients.

NaviSite operates 15 Data Centers located across the US and UK, with about 230,000 square feet of usable customer space. The company operates facilities in Andover, Mass.; Chicago; Dallas; Houston; Las vegas; London; Charlotte, N.C.; Minneapolis, Minn.; New York City; Oak Brook, Ill.; San Francisco; San Jose, Calif.; Syracuse, N.Y. and Vienna, Va. in the U.S. and sites at London and Woking in the UK.

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